“It’s crucial for GSK to increase growth while minimizing risk.” The company needs to find new sources of growth as healthcare systems worldwide undergo reforms and budget cuts. GSK is also outsourcing research to partners in order to reduce risk. One of their successful collaborations is with Theravance, an American company that developed the asthma treatment Relovair, which is currently in the final stages of development. GSK recently increased its ownership stake in Theravance to 19% and plans to follow a similar pattern with other collaboration deals 1. GSK is currently implementing strategies for both growth and stability, aiming to improve their overall market position. They are identifying and pursuing varied strategies in different areas of their business to capture market share. One of GSK’s primary strategies is diversifying and balancing their portfolio, shifting away from solely relying on sales from “white pills” in Western markets. Sales from these products and markets decreased from 40% in 2007 to 25% in 2010. This shift should help mitigate the negative impact of patent expirations on the company over time. 2. Strengthening the core pharmaceutical business is the main focus for GSK.
The text states that increased investment will be made in growth areas such as emerging markets, vaccines, Japan, dermatology, and Consumer Healthcare. Specifically, the Consumer Healthcare sector requires more comparative R&D. To support this strategy, resources including infrastructure, finance, knowledge, R&D, and sufficient efficient HR are needed. GSK’s capabilities include a well-known brand name and image, as well as being market leaders in the Pharmaceuticals sector.
The healthcare sector can be seen as a complementary service to the pharmaceutical sector, which may strengthen GSK’s position and give them a competitive advantage. GSK’s unique focus on the Japanese market sets it apart from its competitors who target larger markets or specific segments, allowing GSK to increase its market share.
Focusing on all emerging sectors will aid the organization’s growth with reduced risks. The focus may differ based on the business segment and operational area. In the pharmaceutical sector, the emphasis lies on overall market positioning. Nonetheless, in emerging sectors and the Japanese market, strategies could be employed to initially attract a specific target group and eventually expand to achieve a dominant market position. Additionally, in developing economies such as Africa, a cost-effective model can be identified in their primary business area, which is Pharmaceuticals.
From one perspective, GSK’s strategy appears to involve adopting a differentiated focus. They are concentrating on specific economies, such as Japan and emerging markets, in an attempt to differentiate themselves. This differentiation can be observed through their business segment operations and their approach to R&D. Additionally, the management team has been developing policies to deliver a greater number of valuable products. By transforming their R&D processes, GSK aims to not only ensure quick delivery of their current pipeline but also sustain a continuous flow of products in the future.
The Management has decided to:
- Focus on the best science
- Diversify through externalisation
- Re-personalise R&D
- Focus on return on investment
Eight (8) Three strategic priorities Since 2008, the company has focused their business around the delivery of three strategic priorities, which aim to increase growth, reduce risk and improve their long-term financial performance:
Strategic priorities
- Grow a diversified global business – We are diversifying our business to create a more balanced product portfolio and move away from a reliance on traditional ‘white pill/ western markets’.
GSK is investing in key growth areas such as Emerging Markets, Japan, Vaccines, and our Consumer Healthcare business. The company aims to deliver more products of value by sustaining an industry-leading pipeline of products that demonstrate value for healthcare providers. GSK’s R&D strategy includes focusing on the best science, diversifying through externalization of research, and improving returns on investment. The company is also simplifying its operating model to reduce complexity, improve efficiency, and reduce costs. In addition, GSK has decided to evolve its commercial model, reshape manufacturing, streamline processes, and reduce working capital. The company’s value chain includes the phase development, which is common to all pharmaceutical firms. GSK stands out in the process of developing a product through its unique approach.GSK R&D has developed an exceptional pipeline of potential new medicines in the industry, currently managing over 150 projects in human clinical trials worldwide in 2009.
The primary objective is to safely and efficiently deliver this pipeline to patients. Our early research involves identifying biological targets that interfere with a specific disease and developing small molecules or biopharmaceuticals to interact with these targets. To enhance our scientific focus, we have created an entrepreneurial environment in our discovery process, building on the successful Centres of Excellence for Drug Discovery (CEDD) model. These CEDDs are groups dedicated to specific therapy areas. Taking this model further, we have established smaller Discovery Performance Units (DPUs) within each CEDD. DPUs are integrated groups of 5-70 scientists who concentrate on a particular disease or pathway. Currently, GSK has 36 DPUs, with the number varying based on the science. Some standalone DPUs have been created to explore new therapy areas (like Ophthalmology) or novel working methods (such as collaborative drug discovery projects with academia in the academic DPU). The CEDDs are currently one year into their 3-year business plan, which sets out the overall budget and clear objectives.
At the end of year 1, the business plans have undergone review. Our discovery organization is currently meeting GSK’s objectives. We are actively seeking out compounds from other companies to enhance our portfolio and are establishing partnerships to strengthen our reputation as a preferred partner for companies of all sizes. With our expertise in internal R&D, we have a competitive edge in business development, allowing us to supplement our internal pipeline through acquisitions, in-licensing, co-marketing/co-promotion deals, and future collaboration options. Our ultimate goal is to deliver these medicines to patients. As we progress into late-stage development, we focus on optimizing the physical properties of the medicine, such as the chemical steps and formulation necessary for manufacturing and delivery. Additionally, we conduct larger-scale studies in humans to confirm the medicine’s efficacy and safety. The regulatory team takes responsibility for combining the results of these steps into a regulatory file for submission to regulatory agencies, ultimately leading to approval for patient use. Our Medicines Development division is organized by therapy areas in Medicine Development Centres (MDCs), specifically Cardiovascular and Metabolic, Infectious Diseases, Neurosciences, and Respiratory.
Each MDC is responsible for taking experimental drugs and developing them into medicines that are approved by regulatory agencies for use by patients. The MDCs have the responsibility of generating value by implementing comprehensive plans for product development and establishing strong partnerships with other departments within GSK, such as the CEDDs, preclinical development, regulatory and commercial groups, and manufacturing. In 2009, efforts were made to simplify the clinical development organization and prioritize project spending over infrastructure, aligning with R&D’s focus on return on investment. To increase our chances of success, R&D has integrated the discovery and late stage development groups in Oncology and Biopharmaceuticals, allowing us to establish a strong presence in these two areas of growth for GSK and concentrate on building a robust pipeline. Both integrated units have been fully operational and successful in advancing their pipeline throughout 2009 (refer to pipeline chart). Additionally, our China Discovery team focused on neurodegeneration and neuroinflammation celebrated its second anniversary in 2009.
With around 280 employees in 2009, the company has experienced growth and has built an impressive early stage portfolio. Currently, the team is in the process of establishing clinical capabilities as their products enter the clinic. A product management board reviews key projects that have reached significant milestones on a monthly basis to determine if they meet the criteria for progressing to the next phase of development. The Chief Medical Officer at GSK, in collaboration with the Global Safety Board, holds ultimate responsibility for overseeing all major decisions related to patient safety.
Our Global Safety Board is in charge of approving pivotal studies and investigating any patient safety issues that arise during the development program and after the launch. Information about clinical trials conducted by GSK can be found easily on the Clinical Study Register on GSK’s website. The R&D Executive team (RADEX) is responsible for overseeing strategic issues and budget management across R&D. Source: http://www.gsk.com/investors/reps09/GSK-Report-2009-full.pdf
